The world is changing and developing around us at a lightening pace – only a few years back we had to sign to make payments via credit or debit card; then Chip & PIN came along, and now you’re telling me we just have to wave our cards or mobile phones in front of a reader to make purchases? It sounds crazy but this technology has been designed to make payment transactions faster and more convenient for consumers.
Contactless technology has really progressed in the last 12 months. The first card on offer was from Barclaycard (it first launched one in 2007 that could also be used as an Oyster card, which also relies on Contactless Technology) – you probably remember the advert of Stephen Mangan on the flume around London which hit our screens last year. However, there is now a wide variety available on the market from different card issuers, including American Express, JP Morgan Chase, and HSBC.
The market has grown significantly – in the last three months of 2010 alone, more than 3 million credit cards with contactless technology were issued. The total number of contactless credit and debit cards by the end of 2010 was 12.9 million, with 52,700 contactless terminals present throughout the country. These figures are only expected to increase with analysts suggesting that 1 in 5 Britons will have a contactless credit or debit card by the end of 2012.
As of February 2010, the maximum payment for contactless credit cards is £15 in the UK. This limit is there as a security measure because when making a transaction with your card as you don’t have to enter a PIN or sign anything. This has likely resulted in the perception of a security issue, leaving many consumers concerned about the safety of using contactless technology.
Here we are going to look into the common issues that the British public have surrounding contactless technology and credit card fraud.
Lost and stolen cards
Many people are concerned that if someone else managed to get their hands on their contactless credit or debit card that they could simply empty their account by making multiple transactions of up to £15. While this is technically (and physically) possible, you can prevent loss by contacting your card provider as soon as possible after realising you have lost your card or it has been stolen – many providers even have 24 hour emergency lines in place to ensure that you can inform them of the loss/theft of your card as soon as possible.
As soon as you have notified the card provider they can cancel the card just as they would with any credit or debit card.
Jemma Smith of the UK Payments Administration, a service offering expertise in the UK payments industry, points out that “as with any fraudulent card transaction – if a fraudster were to use your contactless card – unlike cash you would not find yourself out of pocket.”
Credit card security
As there is no obvious security associated with contactless credit cards there is a lot of concern around credit card fraud. However, Smith informs us that “the security of contactless on UK cards is built on the same secure technology as chip and PIN – which uses the tried and tested global EMV protocol.”
We have heard so much about the increase of credit card fraud in the media over the last year or two so it is reasonable that people might think that contactless technology is the perfect way to commit fraud. However, the numbers seem to speak for themselves as Jemma Smith tells us that “contactless cards in the UK are still in relatively small numbers and fraud to date has been negligible”.
Smith also said: “As the technology becomes increasingly available, and should fraud become an issue, existing industry processes are in place to address any issues.”
New ways to steal
Surely the introduction of contactless technology has brought about new ways for fraudsters and criminals to swindle people out of their money? The most obvious way surely being for someone to get their hands on a contactless reader and simply walk around with it, deducting £15 from everyone’s cards in their wallets or pockets.
Once again Jemma Smith, of the UK Payments Administration, explains to us why this is not something that consumers should be worried about:
“There are a number of reasons why it’s very unlikely a fraudster would attempt to use a contactless reader to capture card details. Firstly, there is the hurdle of the risk management systems within the chip that minimise the usability of any data obtained by reading the card, but secondly even if the fraudster was successful in capturing card data they would still need a genuine business banking relationship, to process the contactless transaction (of £15 or less).
“This would obviously create a clear audit trail straight back to them, making it a high risk strategy for a small return. On top of this there is the practical challenge of getting a terminal reader close enough to the cardholder’s card – the reader equipment needed to work beyond a 10 cm range would be very large and hard to conceal.”
